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Article
Publication date: 1 January 2004

Susan S. Krawczyk

During 2003, compensation practices for the retail sale of mutual funds came under fire. Recent revelations about failures in the processing of mutual fund breakpoints had…

Abstract

During 2003, compensation practices for the retail sale of mutual funds came under fire. Recent revelations about failures in the processing of mutual fund breakpoints had triggered a more in‐depth investigation into mutual fund marketing and compensation practice by securities regulators, Congress, and the states. This article focuses on the regulation of sales compensation practices primarily as it affects a broker‐dealer selling mutual funds in the retail market. It addresses the regulatory framework for three key compensation practices: (1) the use of non‐cash compensation in connection with mutual fund sales; (2) marketing and compensation arrangements providing enhanced compensation to a selling firm as well as to its sales representatives for the promotion of certain fund securities over others, such as proprietary funds over non‐proprietary funds, preferred funds over non‐preferred funds, and Class B shares over Class A shares; and (3) the use of commissions for mutual fund portfolio trades as an additional source of selling compensation for selling firms, a practice sometimes referred to as ”directed brokerage.“

Details

Journal of Investment Compliance, vol. 4 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 21 November 2016

Sayan Chatterjee, Venkat Narayanan and William Malek

This article describes an approach to strategy execution using lessons learned from improvement efforts to the sales incentive compensation (SIC) business processes and IT systems…

1526

Abstract

Purpose

This article describes an approach to strategy execution using lessons learned from improvement efforts to the sales incentive compensation (SIC) business processes and IT systems in Cisco Systems.

Design/methodology/approach

This case outlines an alternative approach to strategy execution–a COAR strategy map methodology– illustrated with lessons learned from efforts to improve the sales incentive compensation business processes and IT systems in Cisco Systems.”

Findings

By following a structured and systematic process, organizations can implement a process for strategy execution that is effective and repeatable. In executing strategy, stay focused on how to translate the decisions taken while defining business strategy into operations. As business strategy changes, elements of the strategy execution must change as well.

Research limitations/implications

This case is primarily a guide to strategy execution and is not meant to be a prescription for a cutting edge sales compensation plan.

Practical implications

Although the examples used in this article relate to SIC business processes, the lessons learned can be applied to strategy execution in general.

Originality/value

It is this “peek forward” into a virtual execution setting, and the opportunity to use it as a scenario-like tool to test alternatives, that increases the likelihood that managers will devise a stable and executable strategy.

Details

Strategy & Leadership, vol. 44 no. 6
Type: Research Article
ISSN: 1087-8572

Keywords

Article
Publication date: 1 February 1985

Hubbard and Associates

Savings institutions are progressively improving their sales orientation and provide some encouragement that such institutions are making stronger commitments towards being…

Abstract

Savings institutions are progressively improving their sales orientation and provide some encouragement that such institutions are making stronger commitments towards being competitive in the new deregulated environment. The findings of a questionnaire‐based study conducted by FIMA and Hubbard and Associates within America also indicate that savings institutions' managements still have much to learn.

Details

International Journal of Bank Marketing, vol. 3 no. 2
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 11 July 2016

Lu-Ming Tseng, Yue-Min Kang and Chi-Erh Chung

This case study aim to investigate the impacts of insurance agents’ positive attitude toward inappropriate product recommendations on the insurance agents’ intention to make the…

1308

Abstract

Purpose

This case study aim to investigate the impacts of insurance agents’ positive attitude toward inappropriate product recommendations on the insurance agents’ intention to make the inappropriate product recommendations. This study further checks how the attitude and intention could be enhanced by the insurer’s manipulation of sales compensations, the agents’ perception of information asymmetry between customers and insurance agents and the insurer’s sales orientation.

Design/methodology/approach

Full-time insurance agents from the life insurance industry in Taiwan were surveyed. To test the hypotheses, hierarchical regression analyses were used in the study.

Findings

The main results showed that the respondents’ positive attitude toward inappropriate product recommendations was the influential predictor of the respondents’ behavioral intention. Nevertheless, the positive attitude was enhanced by the manipulation of sales compensations and the insurer’s sales orientation.

Originality/value

Very few studies have investigated the relationships among information asymmetry between customers and agents, management’s sales orientation, management’s manipulation of sales compensations and the problems of selling unsuitable insurance products to customers. This study may contribute to the relevant literature by discussing these issues.

Details

Journal of Financial Regulation and Compliance, vol. 24 no. 3
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 16 May 2023

Yu-Hsien Lu, Yue-Min Kang and Lu-Ming Tseng

The purpose of this paper is to explore how sales compensation disclosure, salespeople’s perception of corporate social responsibility (CSR) toward customers (i.e…

Abstract

Purpose

The purpose of this paper is to explore how sales compensation disclosure, salespeople’s perception of corporate social responsibility (CSR) toward customers (i.e. customer-focused CSR), regulatory knowledge and coworkers’ ethical behavior may influence life insurance salespeople’s moral intensity and intentions to engage in misleading sales behaviors.

Design/methodology/approach

The hypotheses are analyzed using partial least squares (PLS) regression with the data gathered from full-time life insurance salespeople in Taiwan.

Findings

The main findings indicate that disclosing sales compensations will alter the ethical decision-making process of life insurance salespeople. The findings further point out that customer-focused CSR is an important variable affecting moral intensity and ethical intentions.

Originality/value

There has not been any research on the effects of compensation disclosure on moral intensity and misleading sales behavior. The literature gap has led to a poor understanding of the relationship between the compensation disclosure policy and ethical sales behavior. Moreover, previous studies indicate that specific factors (such as moral intensity and ethical intention) are directly associated, while the research shows that as long as a regulatory policy (e.g. the policy of compensation disclosure) changes, the correlation between these variables may shift from significant to nonsignificant (or vice versa). The results are interesting enough to warrant more research, and they also show that the direct link between variables mentioned in previous research is not always stable or universal.

Details

Journal of Financial Regulation and Compliance, vol. 31 no. 5
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 26 April 2011

Yossi Hadad, Baruch Keren and Ofer Barkai

The purpose of this paper is to propose a wage incentive plan for branch managers of multi‐branch firms. The incentive payment is calculated according to each branch's performance…

1682

Abstract

Purpose

The purpose of this paper is to propose a wage incentive plan for branch managers of multi‐branch firms. The incentive payment is calculated according to each branch's performance and its relative rank, taking into consideration common variables, regional variables and managerial skill variables.

Design/methodology/approach

The paper utilizes Andersen and Petersen's super‐efficiency model, which is based on the model of Charnes, Cooper and Rhodes, the most widely used and best known data envelopment analysis model. The regional variables and the managerial skill variables are considered as inputs (resources). The periodic measured efficiencies are then translated into a special wage incentive plan with promotive and contrient interdependence between the branch managers.

Findings

The regional variables and the managerial skill variables have a significant impact on the efficiency of each branch and on the ranking of the branches. These variables may increase or decrease the relative efficiency and the incentive payments of the branch managers.

Practical implications

The research provides tools for applying a wage incentive plan for branch managers of multi‐branch firms. The proposed incentive plan is more fair than most other incentive plans because it takes into account regional variables. Furthermore, it can increase the flexibility of the top management to switch branch managers, to send talented managers to problematic branches/regions/countries and to decrease the attractiveness of the profitable branches. The method also enables us to evaluate the performance of each branch over periods of time. The practicability of the proposed plan is demonstrated by a real‐life case study.

Originality/value

Beyond the common input and output variables that measure efficiency, the plan presented in the paper takes into consideration those regional variables which characterize each branch as well as the managerial skills of the branch managers. The total cost for the incentive payment is a given portion of the global corporate net profit.

Details

International Journal of Productivity and Performance Management, vol. 60 no. 4
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 1 June 1992

Stephen C. Strelsin and Susan Mlot

As an upstart company in the telecommunications industry, Commtech (a pseudonym, as are all company names featured in this article) decided to blanket all potential markets held…

Abstract

As an upstart company in the telecommunications industry, Commtech (a pseudonym, as are all company names featured in this article) decided to blanket all potential markets held by industry leaders with low‐cost products—a marketing blitzkrieg that caught the competition off guard. Before competitors could effectively reposition themselves for the new marketplace reality, Commtech's market share grew as it quickly entered and captured fragments of markets across the country.

Details

Journal of Business Strategy, vol. 13 no. 6
Type: Research Article
ISSN: 0275-6668

Article
Publication date: 4 February 2014

Lu-Ming Tseng and Yue-Min Kang

The purpose of this paper is to explore the impacts of the size and timing of sales compensations, the management stringency of the insurer and the insurance broker's own moral…

1140

Abstract

Purpose

The purpose of this paper is to explore the impacts of the size and timing of sales compensations, the management stringency of the insurer and the insurance broker's own moral views on product recommendations made by the brokers.

Design/methodology/approach

The data used in this research were gathered from life insurance broker companies in Taiwan.

Findings

The results showed that the sales compensations, perceived leniency of the insurer's underwriting and claim policy would affect the product recommendations made by the brokers.

Practical implications

Insurance brokers are one of the most important marketing channels in the insurance industry. However, using the insurance brokers to sell insurance may result in some ethical problems. For example, some insurance brokers may sell insurance to high-risk customers because the high-risk customers may prefer to buy more insurance and that means more sales compensations can be earned. The findings of this research may have some implications for insurance management and insurance regulation.

Originality/value

This study contributes to the understanding of insurance brokers' responses to adverse selection problems (high-risk customers may prefer to buy more insurance) and product recommendation decisions. The issue has been less mentioned in the financial regulation literature.

Details

Journal of Financial Regulation and Compliance, vol. 22 no. 1
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 23 May 2020

Pravin Nath

While metrics are becoming increasingly important for marketing’s relevance, there is also a need to understand how they, as enablers of learning, affect marketing’s adaptive…

Abstract

Purpose

While metrics are becoming increasingly important for marketing’s relevance, there is also a need to understand how they, as enablers of learning, affect marketing’s adaptive capabilities that ensure its long-term success. Therefore, this study aims to test the association of marketing and financial metrics use and the metric-based orientations of training and compensation, with two key marketing routines – exploitation, i.e. the perfecting of existing activities while allowing for incremental adaptations and exploration or experimentation accompanied by radical adaptation.

Design/methodology/approach

The study gathers data from 205 managers and uses partial least squares structural equation modeling to test the hypothesized relationships.

Findings

Marketing metrics encourage both forms of marketing adaptation. Financial metrics use discourages exploration. Market orientation and long-term orientation strengthen (weaken) the positive (negative) relationship between marketing (financial) metrics use and marketing exploration. Metric-based training is more positively associated with both adaptive capabilities than a metric-based compensation orientation, albeit weakly.

Research limitations/implications

The study’s central proposition – that different metrics or metric orientations are associated with distinct types of knowledge, interpretations, mindsets, motivations and cultural contexts – provides a deeper theoretical understanding of the pathways by which a metric emphasis affects marketing adaptation.

Practical implications

Marketing managers should emphasize marketing metrics and training more than compensation, to promote marketing exploitation/exploration, while exercising caution in overstressing financial metrics given their negative association with exploration. This latter negative relationship can be weakened (as can the positive one between marketing metrics and exploration be strengthened) with increased market orientation and long-term orientation.

Originality/value

This study addresses the research gap regarding the relationship between metrics as a configurational element of marketing organization and marketing adaptation.

Article
Publication date: 1 September 1997

J. Howard Finch and John G. Fulmer

There are techniques available for deciding on initial project viability. Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR) and other…

Abstract

There are techniques available for deciding on initial project viability. Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR) and other techniques are well known and widely used in an effort to estimate a project's initial profitability and feasibility. The purpose of this article is to illustrate the use of two of these techniques to evaluate in‐progress projects and to measure the financial performance of an entire group of projects in a division over a specified time period. Many managers would like a system that allows them to evaluate on‐going projects and a system that allows them to state, for example, how one entire division performed, on all of its projects, over the 1990–1995 time period. Among other things, this will allow management to evaluate the performance of one division relative to other divisions.

Details

Managerial Finance, vol. 23 no. 9
Type: Research Article
ISSN: 0307-4358

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